Helium and natural gas producer Renergen has lost a third of its value since January 1, piling pressure on CEO Stefano Marani, who is drumming up financial support to push through phase two of its Virginia gas project, which is seen as a potential game changer for the company since it was founded nearly a decade ago.
The second phase of the project aims to catapult Renergen into a significant supplier of helium and liquefied natural gas (LNG). However, it has battled to attract enough backing from large institutional investors, prompting the company to seek a listing on the Nasdaq where it believes the global helium market is better appreciated.
Large institutional investors such as pension funds typically invest in JSE-top 40 companies, partly because of liquidity, as opposed to small-cap players.
The proposed Nasdaq listing of Renergen has been delayed after it was initially scheduled to happen in 2023.
Renergen needs to raise $200m (R3.786bn) from the US listing or private investors as part of the conditions to access $750m in promised cash for further development of its gas and helium reserves.
The delayed $750m funding package is earmarked to turn the gas producer into a profitable company and increase how much natural gas and helium it can extract from its Free State gas field by 2027.
Its share price ended little changed on Monday at R10.38 on the JSE but has lost nearly 34% so far this year, indicating market angst over its prospects.
Its market value of R1.5bn pales in comparison to the R6.3bn it reached just less than two years ago when the share price peaked at about R43.
Canadian miner Ivanhoe has been selling its shares in Renergen. The sale of shares can be a sign that insiders do not believe the share price is likely to rise or they may feel the company is overvalued.
According to Renergen’s share register, between November 2023, when Ivanhoe Mining held just more than 5.6-million shares in the firm, and late January, Ivanhoe has sold 1.06-million shares or about 20% of its initial stake.
Renergen supplies LNG to bathroom and ceramics retailer Italtile and to glass manufacturer Ardagh Group under the first phase of the gas project. However, helium production has been delayed.
The company holds onshore exploration and production rights for more than 187,000ha of gas and helium fields across Welkom, Virginia and Theunissen in the Free State. /With Katharine Child
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.